Cboe Global Markets Inc. has unveiled the inaugural offerings from its new prediction markets suite, named Cboe Predicts. This suite introduces binary option contracts linked to the Mini-S&P 500 Index (XSP).
The new contracts are currently accessible via Interactive Brokers, with plans for availability on Charles Schwab in the near future. Additional retail brokerage platforms are also anticipated to provide access as time progresses.
This launch enhances Cboe's existing lineup of S&P 500 Index options and aligns with the rising interest in outcome-based trading products. The XSP index mirrors the performance of the S&P 500 Index but is scaled down to one-tenth the size of the standard SPX contract, making it a cost-effective option for retail traders.
With these contracts, participants can opt for a “yes” position if they believe the index will close at or above a designated level, earning a payout of $100 if correct. Conversely, they can choose a “no” position if they predict the index will finish below that level, also receiving $100 if their prediction holds true. Incorrect forecasts result in a settlement of $0.
JJ Kinahan, Cboe's Head of Retail Expansion and Alternative Investment Products, stated, “Following the success of SPX 0DTE options, we have seen ongoing customer demand for shorter-dated, outcome-based trading, which naturally leads to the introduction of XSP binary options.”
He further noted, “Cboe's S&P 500 options suite has long provided traders with the flexibility to define outcomes through traditional options strategies. With Cboe Predicts, we are enhancing that choice by offering straightforward 'yes-or-no' payout event contracts, backed by dedicated educational resources to help customers engage more confidently and responsibly.”
The launch comes amid a surge in prediction market activity within the financial services sector. Companies like Robinhood, Interactive Brokers, and Coinbase are now entering this space, joining established players such as Polymarket and Kalshi.
Nonetheless, the market is still grappling with regulatory challenges, including jurisdictional disputes involving the Commodity Futures Trading Commission and state regulators.
Cboe clarified that its XSP prediction market contracts are categorized as security options and will operate under the same regulatory framework that governs US-listed options.
The products will be centrally cleared by the Options Clearing Corporation (OCC), which manages clearing and settlement processes. Mike Hansen, Chief Clearing and Settlement Services Officer at OCC, remarked, “OCC is prepared to provide the same clearing infrastructure and risk management discipline for these new binary options as we do for all the products we clear. Our commitment to operational excellence and financial integrity ensures participants can engage with confidence, knowing each transaction is backed by robust clearing and settlement services.”
Interactive Brokers CEO Milan Galik highlighted the increasing investor demand for event-driven market exposure, stating, “Investors are increasingly looking for products that allow them to express specific views on future events and market outcomes. Cboe's binary options and Mini-S&P 500 Index contracts offer another avenue for this, and we are excited to make them available to our clients.”
Charles Schwab has also confirmed its intention to add these contracts to its platform. James Kostulias, Head of Trading Services at Charles Schwab, commented, “We support initiatives that enhance transparency, defined risk, and investor education in financial-related prediction markets. We plan to provide our clients access to these binary options contracts in the upcoming months, building on our existing platform and the demand from active traders.”
Looking ahead, Cboe has plans to enable trading of XSP vertical spreads through its patent-pending Quoted Spread BookSM (QSBSM) framework, which aims to package established options strategies into a format that assists newer traders in transitioning from binary event contracts to defined-risk options strategies.